Eurozone inflation above expectations in May

Eurozone inflation was higher than expected in May, fending off possible dangers to the area’s fragile economies

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

Good news came in for the euro area on Tuesday after consumer prices rose for the first time in six months during May. The upbeat in data also reduces the threat of deflation, a risk which the European Central Bank (ECB) has been striving to avoid.

After a long period of declining inflationary data, consumer prices in the 19 countries sharing the euro gained more momentum than expected, reading 0.3 percent, higher than in the same month last year, reported the European Union's statistics office - Eurostat.

The Eurostat forecast does not consist of monthly data, thus, the annual data showed that the upbeat in the overall index was driven by more expensive unprocessed food and services.

Excluding the fluctuation in energy prices, which fell by 5 percent against 5.8 in the months to April, consumer prices increased by 1 percent. While core inflation, excluding energy and unprocessed food, prices rose by 0.9 percent - the fastest in nine months - from 0.7 percent in April.

The fruitful data on inflation could mean that the ECB’s quantitative easing programme which commenced in May is starting to show results. 

Towards the end of 2014, energy prices began to fall. This made the central bank wary as it could trigger a fall in the prices of goods and services, leading to deflation. As a result, the ECB implemented the bond buying programme, injecting more cash into the economy in order to prevent deflation. 

TRTWorld and agencies